In negotiations, there is typically a back-and-forth process to discover if there is an agreeable number which works for both parties. If the initial offers from each side are non-overlapping, there is often a ratcheting on each side to try to come closer together.
The numbers themselves, including how they are played, matter a lot. For instance, imagine a scenario where A and B are negotiating. These two scenarios result in different outcomes:
- A starts at $100; B counters with $20; A $80; B $40; A $60; B $50; A $55; agreement
- B starts at $20; A counters with $100; B $40; A $80; B $60; A $70; B $65; agreement
That’s over 18% different just due to the ways in which the numbers were played. Numbers and how they are played matter. It is important to think through the end game throughout the entire negotiation process.
Derek Sivers has a must read post on this concept. He shares how he can auction off a $100 bill for more than $100.
Here are things to think about:
- The initial anchor number is very important and often sets the tone for the entire negotiation; setting the anchor number is more often the enviable position.
- Look for ways to get the other side to make consecutive movements in their number so that you can skip a step of movement.
- Try to move in smaller increments than the other side.
- Be prepared to walk away from the table.
What are your thoughts on the numbers in a negotiation?